| 22.07,09. 01:48 AM |
for first-home buyersJacob Saulwick National Correspondent
July 22, 2009
THE proportion of home owners in NSW and the ACT struggling to muster their mortgage repayments has halved in the past two years - but it is still the highest in the country.
Among borrowers in NSW and the ACT, only 15 per cent now find it difficult to pay their loan, down from almost 30 per cent in 2007, according to the report, released yesterday by the mortgage insurer, Genworth Financial.
But there are concerns about a mini-boom among first-home buyers, lured into the market by grants pumped up by the Government to help stimulate the economy.
One in five first-home buyers expect difficulty meeting their repayments in the coming year, compared with one in seven among existing buyers.
First-home buyers are also taking out riskier loans. Last year, one in five took out a loan with less than 10 per cent deposit. But this year, one in three home buyers is taking out a loan with less than 10 per cent deposit.
"Certainly the increase is a consequence of the first-home buyer's boost," said the chief executive officer at Genworth Financial, Martin Barter, referring to payments ranging from $14,000 to $21,000.
But Mr Barter said he did not think a bubble had formed in the market for first homes, mostly because banks had tightened lending standards.
But in their rush some buyers are finding ways around new bank limits that prevent 100 per cent home loans.
Otto Dargan, from Home Loan Experts in Enfield, said in the past two months there had been a surge in the number of "guarantor applications" - where first-home buyers use their parents' houses as additional security to get a 100 per cent home loan. "Forty per cent of our loans are now guarantor loans," Mr Dargan said. A couple of months ago, "they were 5 per cent, they were nothing".
Mr Dargan said some banks were becoming concerned about guarantor loans, particularly if the applicant's parents were quite elderly.
Genworth's survey cited unemployment as the main worry among home buyers.
And Mr Barter said that while mortgagors in NSW cited the highest level of stress, those in other states were catching up.